Minister of Finance Camillo Gonsalves has defended his government increase of the Customs Service Charge from 5% to 6%.
“This was introduced in the Budget [in February],” he said as he wrapped up the debate before the law was passed in a vote without the support of the opposition on Tuesday.
“This measure we’re not springing it on anybody today. An entire opposition responded to the Budget. And the Honourable Leader of the Opposition had four hours when he responded to the Budget and his contribution on this was: government, you say it’s 1%. It’s not 1% it’s one percentage point but it’s actually 20%. And he moved on.”
The Opposition Leader, Godwin Friday, commenting from across the floor, said, “The point is, I said that this should not be done.”
The finance minister, however, said that during Tuesday’s debate, the Parliament heard opposition lawmakers describe the amendment as “‘callous’, ‘wicked’, ‘unconscionable’, ‘murderation’.
“These were the words used… They described this as a ‘hellish’ amendment that was placed before the people. But there was no need, in four hours of conversation, of debate to discuss it that way,” Gonsalves said.
Gonsalves noted that East Kingstown MP, opposition lawmaker Dwight Fitzgerald Bramble said that he had run out of time during the Budget Debate before he could address the tax increase.
“I will exclude the Honourable Senator Bruce because he tried, albeit with some new-fangled mathematics, but he tried to address it,” Gonsalves said.
“I understand that it is a tax measure and it’s very easy for the opposition, any opposition to rail against a tax measure, I understand that. So, I expect a certain amount of gallery behaviour,” Gonsalves said.
Using a case of chicken leg and thigh as an example, Gonsalves said that the increase will result in a five cents increase in what a consumer pay per pound.
“It comes in at $49.68. You put on your 5%, that would add $2.49; or you put on your 6%, it would add $2.98 on the entire case. You’re going up by 50 cents.”
Gonsalves said that when the 16% VAT is added to the 5% customs service charge, it adds $8.35. If the rate is 6%, the increase is $8.43.
“So you add another 10 cents instead. You put on your Customs Duty, you’re gone $27.24 on one side, $27.49 on the other side,” the finance minister said.
“When it’s all said and done, fee, by fee, by fee, by fee, you come out with $101.81 for your case, if it’s at 5% and $102.76, if it’s 6% — 95 cents on the whole case. So you would spend less than five cents a pound additional on your leg and thigh.”
Gonsalves said that the five cents difference matters. “But you’re telling me five cents on a pound of leg and thigh is murderation? … You can get that five cents difference between one supermarket and the other across the street from one another.
He said that the opposition responded similarly when the government imposed a levy on cellular phone calls to fund the Zero Hunger Trust Fund.
“When the Leader of the Opposition said it was wickedness then as well that we were putting the surcharge on communications to alleviate hunger and poverty and inequality in St. Vincent and the Grenadines. Today, I hear it’s justifiable. But then it was a wickedness.”
He also said that the opposition had also decried the levy that the government placed on hotel rooms so that it could capitalise the Contingencies Fund.
‘… but our tourism went up the following year, and other countries around the region have been replicating the same measure we put in place, save and except that they’re putting on more taxing measures, if you will, on their tourists. But that was a ‘wickedness’ as well. It was going to bring Armageddon, weeping and mourning and gnashing of teeth. But it is just not true,” Gonsalves said.
The finance minister said that as Jamaican artiste Buju Banton sang, “Ah we ah guard yo’ life and you don’t know. When you ah sleep we ah patrol outta door.’ … And when you are asleep, these entities ah patrol outta door.”
The monies from increased tax will be used to pay for the government’s contribution to regional organisations and agencies, including, the Organization of Eastern Caribbean States (OECS), CARICOM, Caribbean Public Health Agency (CARPHA), the Pan-American Health Organization (PAHA), the Regional Security System (RSS), the Caribbean Disaster Emergency Management Agency (CDEMA), the CARICOM Implementation Agency for Crime and Security (IMPACS), the Caribbean Institute of Meteorology and Hydrology (CIMH), the University of the West Indies (UWI) Seismic Research Centre (SRC), and the Eastern Caribbean Civil Aviation Authority (ECCAA).
Gonsalves said there is a young man with a PhD roughing it in the hills of St. Vincent and the Grenadines monitoring the volcano, which has been erupting effusively since December.
This is the third volcanologist to come to the country since the eruption began.
“This volcanologist salary is not in our budget,” he said.
And while the budget was passed in February, more than a month after the eruption began, it also did not include allocation to pay for things like flying helicopters from Martinique and Antigua to help to collect samples from the volcano.
The budget also did not provide for use of other specialist equipment, such as a multi gas analyser and increasing GPS analysis sites from two to 14 across the country to monitor tremors and seismic activity.
“… the cost of that equipment is not in this budget. It’s all contained in a little thing in the back, the little $400,000 that you give to the Seismic Research Unit.
“But the helicopters and the equipment and the expertise is part and parcel of that, which is why we pay for it. Because when you asleep, CARPHA and RSS and Seismic Unit ah patrol outta door…”
He also spoke of the role of the RSS and CARPHA in transporting and testing samples during the COVID-19 pandemic.
“These entities, in a small island developing state — small islands have to pool their resources to perform some of these tasks. But we can’t just create them on paper. They have talented experts working there and they have to be paid and they’re flying aircraft up and down that have to be maintained or gassed, or fixed or whatever it is, these things cost money.”
Gonsalves said it is precisely at this time when revenue is uncertain that the government has to ring-fence this revenue to ensure that these agencies critical to the governance continue to be well resourced.
He said that while the opposition leader was speaking, he went to the office of the Clerk of the House of Assembly and picked up, at random, the 2015 Estimates of Revenue and Expenditure.
Gonsalves said that in 2015, the allocation to CDEMA was EC$100,000, compared to $200,000 — a 100% increase; to CIMH, it was $155,000 compared to $250,000 now — a 61% increase; CARICOM was asking for $654,000, compared to $1.16 million — a 77% increase, the OECS was EC$2.5, compared to EC$3.2 currently; the Seismic Unit gets EC$400,000, a figure which will increase even as it was EC$190,000 in 2015 — an increase over 110%; ECCA has moved from $485,000 to $900,000.
“I’m just showing you that in that five-year period on this shortlist — and remember I didn’t get CARPHA and IMPACTS in there — it’s an additional $2.5 million being spent on this list alone, it’s a 25% increase,” Gonsalves said.
“These things are getting more expensive. But they remain important,” he said, adding that the opposition also recognised the critical importance of these entities.
“We are submitting that this year, in particular, they are even more important than they usually are,” Gonsalves said.
“We are submitting all that revenues are unreliable and unstable this year. … thank goodness that there was a little private transaction between some wealthy individuals [in Mustique] that generated some revenue this month. Thank goodness. I’m not sugar-coating it. As the honourable Senator Bruce said I said from last year that these were going to be rough waters,” the finance minister said.